The government of El Salvador has reportedly decided to postpone the issue of a Bitcoin- (BTC)-backed bond due to the unfavorable market conditions fueled by the geopolitical crisis.
El Salvador’s “Volcano Bond” will not go live in March as the Salvadoran government expected previously, Finance Minister Alejandro Zelaya said in an interview with a local TV channel.
Zelaya claimed that the delay was due to the volatile prices of BTC fueled by the Russia-Ukraine crisis. He added that the government of El Salvador decided to wait for favorable conditions in the financial market, expecting September at the latest, stating:
“Now is not the time to issue the bond [...] In May or June the market variants are a little different. At the latest in September. After September, if you go out to the international market, it is difficult to raise capital.”
At the time of writing, Bitcoin is trading at $42,236, up around 10% over the past 30 days, according to data from CoinGecko. The cryptocurrency has lost nearly 50% of its value since the Salvadoran government initially announced plans for its Bitcoin bonds in November.
Zelaya hinted at a potential delay of El Salvador’s Bitcoin bond last week, citing the unstable political situation in the world as one of the biggest reasons for the postponement.
As previously reported, the $1 billion BItcoin bond was originally scheduled to launch in mid-March. El Salvador Congressman William Soriano took to Twitter in early February to declare that the Bitcoin bond was expected to go live by the second or the third week of March.
El Salvador President Nayib Bukele originally announced plans for the bond in November 2021. The bond is reportedly marketed with a 6.5% coupon and a Bitcoin dividend of 50% of the gain in the cryptocurrency price after five years. Half of the $1 billion expected proceeds from the issuance are set to go toward the construction of the “Bitcoin City,” a development dedicated to geothermal energy-powered Bitcoin mining using nearby volcanoes. The rest $500 million is set to be invested directly into Bitcoin.
Related: 14% of Salvadoran businesses have transacted in BTC: Chamber of Commerce
El Salvador’s delay of the Bitcoin bond launch comes amid the government apparently slowing down the pace of buying new BTC as well. Previously reporting consecutive Bitcoin purchases at least each month, the Salvadoran government has not announced a new buy since January 2022.